Do This One Thing Every Day to Defeat Out-of-Control Spending

Do you wince when you open up your monthly credit card statement? Do you look at the savings in your bank account at the end of the month and wonder where all of your money went? You're not alone. A 2013 study by FINRA Investor Education Foundation found that 41% of people spend less than they earn, 36% spend as much as they earn, and 19% spend more than they earn.

If you find yourself living beyond your means (or close to them), here is a daily practice that you can employ to get your spending under control: Write it down.

A large percentage of our out of control spending derives from not keeping track of what we're spending. Below is a four-step plan with tools and tactics to make writing it down less of a chore and more of an asset to help manage your spending. (See also: How to Do a One Month Spending Freeze)

1. Write It Down

Every time you spend money, write it down. At the end of each day, tally up your spending by category (food, clothes, travel and transportation, etc.) and in total. This will help you see the big picture of your spending as well as the specific areas that are the biggest drain on your money.

2. How to Get It All Down (and Keep It)

Whether you prefer a high-tech or low-tech tool, make sure to choose a method that's easy for you based on your lifestyle.

For some people, simple and tangible is the way to go. A small notebook dedicated to just spend tracking that easily fits in your pocket or purse is a helpful and manageable tool. If you live by the information in your mobile phone, there are many mobile apps to help you keep track of your spending. I use TrackMySPEND,and it couldn't be easier — one click, enter your expense and the reason for it, and save. Done! Another good option is a simple Notepad app.

You Need a Budget (or YNAB for people in the know!) is a popular app for those who like to keep track of their spending within the confines of a set budget. It's a whole budgeting and spending philosophy, so it might be better suited to more advanced spending trackers.

3. Cash Versus Credit Versus Debit

There are many opinions on whether cash, a debit card, or a credit card is the best option to keep spending under control. The answer is different for every person.

If your spending is wildly out of control, then the best option is to carry a set amount of cash each day and never spend beyond that amount.

If you spend more than you'd like to spend, though, and have discipline to check yourself before purchases, then a credit or debit card is a good option. Cards are safer than cash, can be more convenient, and also give you an excellent digital view of your spending through your monthly statement. Most credit cards give card holders the options to set spending alerts and limits so you can keep spending on them in check, too.

Whatever payment method you use — you've still got to write down what you spend.

4. Daily Reflection

This is the most important step of the process.

When you look at your daily spending, spend a minute considering how much satisfaction you received from your spending.

The high you get from what's commonly termed "retail therapy" is very short-lived. If you had that money back in your pocket, would you choose to do something different with it now? How would you feel if you could take your spending from the day and put it away in savings? Think about how hard you had to work to make that money. Does the satisfaction from your spending match the effort it took to make that money? Asking these types of questions really help you see, feel, and understand the real value of money.

A very small amount of people can naturally curb their spending. For the rest of us, limiting our spending is a habit that we must work to build every day. Self-control in every sense is a muscle, and the more we exercise it, the stronger we get.

Do you have regular habits and tips that help you keep your spending under control? Please share them with the Wise Bread community in the comments section below.

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